सविस्तर माहितीसाठी इकॉनॉमिक टाइम्स मधील बातमी वाचावी.

The real side effect of the banking sector crisis is a sharp drop in private investment, especially corporate investment, which has fallen by around 7% of GDP, hurting growth, which, in turn, has further reduced demand for credit. Despite being flush with liquidity after demonetisation, the banking sector has no borrowers and no great desire to lend either.

Falling real credit growth has resulted in a drop in investment. This has led to a drop in GDP growth by about 1%. With a GDP in 2016-17 of around Rs 150 lakh crore, delays in resolving banking sector problems costs the economy about Rs 1.5 lakh crore a year in lost economic output. A delay of five years would cost almost Rs 7.5 lakh crore, in addition to the hole in the banking system estimated to be around Rs 12 lakh crore.

GoI waved its hands at the problem. It initially set up the Indradhanush scheme and tried to bring in more professional management to banks. It then set up a Public Sector Bank Bureau, which had no real powers or money to deal with the issue. It set aside piddling amounts — only Rs 10,000 crore in Budget 2016-17 — to deal with the problem.

The new banking sector ‘Ordinance’ allows the RBI to push banks to take stronger actions. Along with the new bankruptcy law, it may help resolve some of the bad loans, especially in cases where coordination among multiple lenders is needed to take tough decisions on ‘haircuts’. But it is unlikely to make a major dent on the growing NPA problem.

The real and quick solution to the NPA problem was already proposed in the Economic Survey as the Public Sector Asset Rehabilitation Agency (PARA). But such an approach requires upfront funding of around at least Rs 9-10 lakh crore to transfer the assets and fill the hole in the public sector banks (PSBs). The survey proposed that this be financed either by issuing government bonds or by transferring government securities from RBI, increasing its equity holdings.

via NPA crisis: Banking ordinance skirts real solutions to the ongoing crisis